Penn National moving to split in two

Thursday

Aug 22, 2013 at 12:01 AMAug 22, 2013 at 5:52 AM

Penn National Gaming is a few steps closer to its goal of splitting into two companies. Penn National, which owns the Hollywood Columbus and Toledo casinos, plans to separate its gambling operations from its real-estate assets. Those assets would be held by Gaming Leisure Properties, or GLP, a publicly traded real-estate investment trust that would lease its properties back to the operators.

Steve Wartenberg, The Columbus Dispatch

Penn National Gaming is a few steps closer to its goal of splitting into two companies.

Penn National, which owns the Hollywood Columbus and Toledo casinos, plans to separate its gambling operations from its real-estate assets. Those assets would be held by Gaming Leisure Properties, or GLP, a publicly traded real-estate investment trust that would lease its properties back to the operators.

The Wyomissing, Pa.-based company has received approval from the Internal Revenue Service for the split but also needs approval from the regulatory agencies in the 18 states in which it operates casinos and racetracks, as well as from officials in Ontario.

One of Penn’s goals for the split is to secure additional financing at a better rate and use these funds to diversify.

“There are very few pockets of growth left for casinos without cannibalizing one another,” said Brandon Moore, Penn’s senior corporate counsel.

Growth areas, he said, could be hotels, bowling alleys and movie theaters, located near its gambling venues.

At its meeting yesterday, the Ohio Casino Control Commission’s board agreed to allow Penn National to restructure its debt, and it also approved operating licenses for the consolidated Penn operator of its Ohio casinos.

“Penn has met all its legal and regulatory requirements to move forward,” said Matthew Schuler, executive director of the Ohio Casino Control Commission.

One step remains, he said, and that is for the casino commission to approve a license for GLP, which members could vote on at their September meeting.

The casino commission denied a request from Penn to waive a $1.5 million licensing fee.

Members expressed concern that Peter Carlino, Penn’s CEO and chairman of the board, also will serve as board chairman of GLP.

Commission member Martin Hoke called it “fiction to say they are independent” companies, despite the requirement for separate and independent boards.

This issue has been raised in other states.

“They have raised concerns but are satisfied with our answers and the IRS requirements,” Moore said.

Regulators in Pennsylvania and Missouri also approved Penn National proposals connected to the split yesterday, and those from Kansas, Iowa, Louisiana and Mississippi recently have done so.

Penn also is in the midst of building Hollywood at Mahoning Valley Race Course and Hollywood at Dayton Raceway, which are scheduled to open next year and will feature video lottery terminals.